Bombay High Court
Anr Group Of Company vs The State Of Maharashtra on 6 May, 2024
Author: Sandeep V. Marne
Bench: Sandeep V. Marne
2024:BHC-OS:7312-DB
Neeta Sawant WPL-3739-2024-FC.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODG.) NO. 30379 OF 2023
ANR Group of Company } ..Petitioner
: Versus :
1. The State of Maharashtra
2. 'Shri Bhageshwar Mandir, Religious
and Charitable Trust Properties & Funds,
at Ratnagiri
3. Charity Commissioner, Maharashtra
State, Mumbai.
4. Superintendent ( J), Ofcer of Charity
Commissioner, Maharashtra State, Mumbai.
5. Shagun Hospitality Pvt. Ltd. } ..Respondents
______________________________________________
Mr. Yashodeep Deshmukh with Mr. Aditya Tawade i/by. Mr. Kuldeep Singh, for
the Petitioner.
Ms. Uma Palsuledesai, AGP for State-Respondent No.1.
Mr. Gaurav Pandey, for Respondent No.2.
Mr. Prathamesh Bhargude with Mr. Aniket Tawde and Ms. Ieecha Pokale, for
Respondent No.5.
CORAM : SANDEEP V. MARNE, J.
Judgment Reserved on : 30 April 2024.
Judgment Pronounced on : 6 May 2024.
JUDGMENT :
1) Rule. Rule made returnable forthwith. With the consent of the
learned counsel appearing for parties, taken up for fnal disposal.
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2) By this petition, Petitioner is aggrieved by direction given by the
Joint Charity Commissioner on 24 July 2023 directing issuance of public
notices for inviting fresh ofers in the newspapers for sale of property of
Respondent No.2-Trust while deciding Trust's application seeking
permission under Section 36 of the Bombay Public Trusts Act, 1950 (Trust
Act) for sale of the same to Petitioner. Petition also challenges Notice dated
27 September 2023 issued by the Superintendent in the ofce of the Charity
Commissioner inviting ofers for sale of the trust property. Petitioner's
grievance is that Respondent No.2-Trust has already implemented auction
process by publishing advertisement in leading newspapers and that it
received multiple ofers, in which Petitioner was found to be the highest
bidder. That therefore there was no occasion for the Charity Commissioner
to once again direct issuance of notice for fresh ofers in a casual manner.
With this grievance, the Petitioner has fled the present petition.
3) Facts of the case, in brief, are that Respondent No.2 is a Public
Trust registered under the provisions of the Maharashtra Public Trusts Act,
1950 and owns various immovable properties in Ratnagiri and Mumbai.
Respondent No.2-Trust owns building named, 'Bhageshwar Bhuvan' bearing
House No. 4822/2023, (197-B/197-C) F.P. No.80 TPS 2, Dilip Gupte Marg,
Mahim (West), Mumbai-400 016 admeasuring 1355.56 sq.mtrs. The building
consists of ground plus two storeyed structure consisting of 122 rooms. In the
building, there are 106 tenants and 16 rooms are provided for residence of
police staf. It is claimed in the petition that the Trust receives Rs.2,93,838/-
annually towards rent, whereas the expenditure incurred by it towards taxes,
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repairs etc. is Rs.2,07,248/- and that additional expenditure of Rs.1,89,692/-
was required to be incurred on salaries of staf in respect of the building.
That thus the total expenditure incurred by the Trust in respect of the
building is Rs.4,12,250/- per year against income of Rs.2,93,838/-.
4) Petitioner submits that in April 2015, Respondent No.2 obtained
a structural report which indicated various kinds of external distress in the
building as more particularly enumerated in para-6(a) of the petition and that
therefore the Trustees decided to unanimously sell the said property by
adopting Resolution dated 17 August 2019. Public notices were published on
9 September 2019 in two prominent newspapers of Mumbai City such as
'Maharashtra Times' (Marathi) and 'Times of India' (English). The Trust
received four ofers from (i) Vibrant Group- Rs.4,50,00,000/- (Rs.4 crores
50 lakhs), (ii) ANR Group of Companies (Petitioner), Rs.9,07,00,000/- (Rs.
Nine crores Seven Lakhs only), (ii) Shagun Hospitality (Respondent No.5)-
Rs.3,50,00,000/- (Rs. Three crores Fifty Lakhs only) and (iv) M/s. 4k
Reality & Developers LLP -Rs.8 crores (Rs. Eight crores only). A Meeting
was held with the bidders requesting them to increase their ofers and M/s.
4K Reality & Developers LLP increased the ofer from Rs.8 crores to
Rs.8,25,00,000/-. After considering the ofers, the Trustees fnally passed a
Resolution on 18 April 2019 accepting Petitioner's ofer at Rs.9,07,00,000/-.
5) By letter dated 1 August 2019, the Trust authorised Petitioner to
start the process of redevelopment of the building by appointing Architect,
Engineer, Surveyor and other professional agencies to conduct survey and for
obtaining various other premises from statutory authorities. Petitioner claims
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to have undertaken the said activities. That therefore was a brief hiatus in the
redevelopment process on account of Covid-19 outbreak during the years
2020-21. On 21 November 2021, the Petitioner and Respondent No.2
entered into Memorandum of Understanding (MOU) under which
Petitioner paid an amount of Rs.51,00,000/- to Respondent No.2-Trust and
agreed to pay the balance amount as per the Schedule indicated in the said
MOU. That the Trust also discussed the issue of redevelopment with the
tenants and residents of the building and a deal was fnalised for
redevelopment of the same.
6) Respondent No.2 fled Application No. 78/2023 under Section
36(a) of the Maharashtra Public Trusts Act, 1950 before the Joint Charity
Commissioner, Maharashtra State, Mumbai for obtaining sanction for sale of
the trust property. Respondent No.2-Trust obtained valuation of the property
from the Government Approved Valuer, who valued the said property at Rs.
18,35,38,054.92/-. However, since the entire building was occupied by
tenants for more than 90 years, considering the claims of the tenants, the
owner's share was valued at one-third (33.33%) of the estimated value and the
same was ascertained at Rs. 6,31,79,000/-.
7) The Joint Charity Commissioner passed Order on 24 July 2023
by way of a handwritten endorsement on the application directing issuance of
public notices inviting fresh ofers in two widely circulated newspapers. As
per the said order dated 24 July 2023, the Superintendent in the ofce of the
Charity Commissioner issued public notice dated 31 July 2023 inviting sealed
ofers from prospective developers for the development-cum-sale of the trust
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property. It is Petitioner's case that Respondent No.2 concealed the Order
dated 24 July 2023 from the Petitioner. On 23 July 2023, a meeting was held
with all stakeholders when Petitioner informed them about joint venture with
Chaitanya Developers Pvt. Ltd. An MOU was executed between Petitioner
and Chaitanya Developers Pvt. Ltd. on 24 August 2023 and a detailed revised
proposal by the joint venture was submitted to the Residential Committee on
24 August 2023 under which the joint venture agreed to provide Permanent
Alternate Accommodation (PAAs) of 450 sq.ft, corpus of Rs.2,00,000/- as
well as transit rent of Rs.30,000/- per month, one month rent and
Rs.10,000/- towards shifting charges. The joint venture agreed to complete
the development within 48 to 60 months.
8) In pursuance of the order passed by the Joint Charity
Commissioner on 24 July 2023, public notice dated 27 July 2023 was issued
by the Superintendent in the ofce of the Charity Commissioner inviting
ofers for sale of the trust property proposing to open the bids on 2
November 2023. The notice was published in 'Business Standard' and
'Kokan Pudhari' newspapers on 30 September 2023. Petitioner has
challenged the said public notice, as well as the order of the Joint Charity
Commissioner dated 24 July 2023 in the present petition.
9) During pendency of the present petition, this Court enquired
with the learned AGP about the ofers received in pursuance of the public
notice dated 27 September 2023 by Order dated 22 March 2024. The learned
AGP has placed on record, copy of letter of the Joint Charity Commissioner
dated 1 April 2024 stating that only one ofer was received from M/s. Shagun
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Hospitality Pvt. Ltd. for Rs.10 crores and that the said bidder deposited
amount of Rs.1 crore alongwith his ofer. Accordingly, Petitioner was directed
to implead 'M/s. Shagun Hospitality Pvt. Ltd' by amending the petition and
accordingly 'M/s. Shagun Hospitality Pvt. Ltd' has been impleaded as
Respondent No. 5 to the petition.
10) Mr. Deshmukh, the learned counsel appearing for Petitioner
would submit that the Joint Charity Commissioner has erred in inviting fresh
ofers without appreciation of the fact that auction process was implemented
by the Trust by publishing tender notices in leading newspapers in Mumbai
such as 'Maharashtra Times' and 'Times of India'. That the impugned
decision of the Joint Charity Commissioner would indicate complete non-
application of mind as not even a single reason is recorded as to why the Joint
Charity Commissioner thought it necessary to invite fresh ofers. That the
jurisdiction of the Charity Commissioner under Section 31(1)(a) of the Trust
is limited to grant of sanction for sale of immovable property of the Trust.
That in every case, it is not necessary for the Charity Commissioner to
mechanically invite fresh ofers. That in the present case, there was no reason
for the Joint Charity Commissioner to believe that Petitioner's ofer accepted
by the Trust was less than the market value.
11) Mr. Deshmukh would submit that in addition to Rs.51 crores
already paid to the Trust, the Petitioner is also required to spend huge funds
in carrying out repairs to the building which is already in dilapidated
condition. That the redevelopment of the Trust building in an expeditious
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manner is in the interest of all the parties, particularly the tenants residing
therein. In support of his contention, Mr. Deshmukh would rely upon :
(i) Siddhivinayak Construction Pvt. Ltd. and anr. V/s. Vikas
Motiram Desai and Ors.1
(ii) Sailesh Developers and Anr. V/s. Joint Charity
Commissioner, Maharashtra and Ors.2
(iii) Suburban Education Society, Mumbai and Anr. V/s.
Charity Commissioner of Maharashtra State, Mumbai and Ors.3
12) Per-contra, Mr. Bhargude the learned counsel appearing for
Respondent No.5 would submit that the bid submitted by Respondent No.5 is
higher than that of the Petitioner and that Respondent No.5 is entitled to
purchase the trust property. He would submit that the Joint Charity
Commissioner is within his right to invite fresh ofers to ensure that the trust
property is sold for highest possible price. That the interest of the Trust is
paramount and steps taken by the Charity Commissioner to ensure highest
ofer for sale of trust property cannot be doubted. Without prejudice, Mr.
Bhargude would submit that Respondent No.5 is willing to participate in the
process of further bidding with Petitioner and this Court may ascertain and
ofer the party who agrees to purchase the trust property at higher price.
13) I have also heard Mr. Pandey, the learned counsel appearing for
Respondent No.2-Trust who would submit that the Trust is entitled to
receive highest possible ofer for sale of its property.
1 2012 SCC Online Bom 493
2 2007 SCC Online Bom 124
3 2003 SCC Online Bom 1054
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14) Ms. Palsuledesai, the learned AGP appearing for Respondent-
State and also representing Respondent Nos.3 and 4 would support the steps
taken by the Joint Charity Commissioner in inviting fresh ofers for sale of
the trust property.
15) Rival contentions of the parties now fall for my consideration.
16) Petitioner is aggrieved by the action of the Joint Charity
Commissioner in inviting fresh ofers for sale of the trust property. Perusal
of the impugned order dated 24 July 2023 would indicate that the same is in
the nature of a handwritten endorsement made on the frst page of the
application fled by Respondent No.2-Trust. The order reads thus:
(O)
Issue public notices inviting fresh ofers in two widely circulating
newspapers (E&M). Next date will be 4.09.2023.
17) The above decision of the Joint Charity Commissioner appears
to be his frst reaction to the application which was fled on/or about 28 June
2023. The order does not indicate any reason as to why the Joint Charity
Commissioner thought it appropriate to invite fresh ofers for sale of the trust
property. In the application, it was pleaded that the Trust had invited ofers
by publishing notices in Maharashtra Times (Marathi) and Times of India
(English) on 9 February 2019 and details of the four ofers were also pleaded
in the application. In my view, the Joint Charity Commissioner ought to have
applied his mind to the said aspect and ought to have recorded atleast a
prima-facie conclusion that the trust property was likely to fetch higher price
if fresh ofers were to be made. This is not a case where the notices were
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published in unknown newspapers with insignifcant circulation. Both
newspapers have possibly the largest circulation in their respective languages
in and around Mumbai City and in any case, way higher than the newspapers
in which the ofce of Charity Commissioner published the notices for
inviting fresh ofers. Four bidders had participated in the bidding process and
Petitioner was found the highest bidder. In the light of this position, there
ought to have been some discussion about the Joint Charity Commissioner as
to why he felt necessary that invitation of fresh ofers was necessary in the
facts and circumstances of the present case. One of the possible reasons for
inviting fresh bids was passage of time from the date of publication of notices
(9 February 2019) and date of fling of application seeking sanction (20 June
2023). Passage of four long years between two dates could possibly be a valid
reason for directing issuance of fresh ofers. However, this reason ought to
have been recorded in the order rather than passing order for invitation of
fresh ofers in a mechanical manner by making handwritten endorsement on
the application.
18) The jurisdiction of the Charity Commissioner under Section 36
of the Trust Act is essentially to ensure that the sale of the trust property is in
the interest of the trust. The jurisdiction is not limited to mere grant of
permission to the seller, which is chosen by the Trust. In an appropriate case,
the jurisdiction of the Charity Commissioner is not circumscribed to
consider only the ofer given by the bidder chosen by the Trust. In the event,
the Charity Commissioner fnds that the tender process implemented by the
Trust does not inspire confdence, the Charity Commissioner, in appropriate
cases, is justifed in directing invitation of fresh ofers and himself conduct
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bidding process so as to ensure that the sale of the trust property fetches
maximum possible price. The interest, beneft and protection of the Trust are
the three classic requirements to be considered by the Charity
Commissioner, and the power extends to inviting ofers from members of
public and directing the trustees to sell or transfer the property to a person
whose bid or quotation is best.
19) Section 36 of the Trust Act provides thus :
36. Alienation of immovable property of public trust
(1) Notwithstanding anything contained in the instrument of trust-
(a) no sale, exchange or gift of any immovable property.
(b) no lease for a period exceeding ten years in the case of agricultural land
or for a period exceeding three years in the case of non-agricultural land or
a building belonging to a public trust, shall be valid without the previous
sanction of the Charity Commissioner. [Sanction may be accorded subject
to such condition as the Charity Commissioner may think ft to impose,
regard being had to the interest, beneft or protection of the trust;
(c) if the Charity Commissioner is satisfed that in the interest of any public
trust any immovable property thereof should be disposed of, he may, on
application, authorise any trustee to dispose of such property subject to
such conditions as he may think ft to impose, regard being had to the
interest or beneft or protection of the trust.
Provided that, the Charity Commissioner may, before the transaction for
which previous sanction is given under clause (a), (b) or (c) is completed,
modify the conditions imposed thereunder, as he deems ft:
Provided further that, if such condition is of time limit for execution of
any contract or conveyance, then application for modifcation of such
condition shall be made before the expiry of such stipulated time.
(1A) The Charity Commissioner shall not sanction any lease for a period
exceeding thirty years under this Act.
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2) The Charity Commissioner may revoke the sanction given under clause
(a) or clause (b) of sub-section (1) on the ground that such sanction was
obtained by fraud or misrepresentation made to him or by concealing from
the Charity Commissioner, facts material for the purpose of giving
sanction; and direct the trustee to take such steps within a period of one
hundred and eighty days from the date of revocation (or such further period
not exceeding in the aggregate one year as the Charity Commissioner may
from time to time determine) as may be specifed in the direction for the
recovery of the property.
Provided that, no sanction shall be revoked under this section after the
execution of the conveyance except on the ground that such sanction was
obtained by fraud practiced upon the Charity Commissioner before the
grant of such sanction.]
(3) No sanction shall be revoked under this section unless the person in
whose favour such sanction has been made has been given a reasonable
opportunity to show cause why the sanction should not be revoked.
(4) If, in the opinion of the Charity Commissioner, the trustee has failed to
take efective steps within the period specifed in sub- section (2), or it is
not possible to recover the property with reasonable efort or expense, the
Charity Commissioner may assess any advantage received by the trustee
and direct him to pay compensation to the trust equivalent to the
advantage so assessed.
(5) Notwithstanding anything contained in sub-section (1), in exceptional
and extraordinary situations where the absence of previous sanction
contemplated under sub-section (1) results in hardship to the trust, a large
body of persons or a bona fde purchaser for value, the Charity
Commissioner may grant ex-post facto sanction to the transfer of the trust
property, efected by the trustees prior to the date of commencement of the
Maharashtra Public Trusts (Second Amendment) Act, 2017), if he is
satisfed that,
(a) there was an emergent situation which warranted such transfer,
(b) there was compelling necessity for the said transfer.
(c) the transfer was necessary in the interest of trust.
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(d) the property was transferred for consideration which was not less than
prevalent market value of the property so transferred, to be certifed by the
expert.
(e) there was reasonable efort on the part of trustees to secure the best
price.(f ) the trustees actions, during the course of the entire transactions,
were bona fde and they have not derived any beneft, either pecuniary or
otherwise, out of the said transaction, and
(g) the transfer was efected by executing a registered instrument, if a
document is required to be registered under the law for the time being
force.
Explanation.- For the purpose of sub-section (5), the term "the Charity
Commissioner" shall mean only the Charity Commissioner appointed
under section 3.
20) The scope of authority to be exercised by the Charity
Commissioner while sanctioning alienation of immovable property of a
Public Trust under Section 36(1)(a) of the Trust Act has been subject matter
of discussion in various judgments. In Chenchu Rami Reddy v. Govt. of A.P.,
(1986) 3 SCC 391 the Apex Court has held:
10. We cannot conclude without observing that property of such institu-
tions or endowments must be jealously protected. It must be protected, for,
a large segment of the community has benefcial interest in it (that is the
raison d'etre of the Act itself ). The authorities exercising the powers under
the Act must not only be most alert and vigilant in such matters but also
show awareness of the ways of the present day world as also the ugly reali-
ties of the world of today. They cannot aford to take things at their face
value or make a less than the closest-and-best-attention approach to guard
against all pitfalls. The approving authority must be aware that in such
matters the trustees, or persons authorised to sell by private negotiations,
can, in a given case, enter into a secret or invisible underhand deal or un-
derstanding with the purchasers at the cost of the concerned institution.
Those who are willing to purchase by private negotiations can also bid at a
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public auction. Why would they feel shy or be deterred from bidding at a
public auction? Why then permit sale by private negotiations which will
not be visible to the public eye and may even give rise to public suspicion
unless there are special reasons to justify doing so? And care must be taken
to fx a reserve price after ascertaining the market value for the sake of
safeguarding the interest of the endowment. With these words of caution
we close the matter.
21) In Shri Ambadevi Sanstha v. Charity Commr., (2019) 17 SCC 419, the
Apex Court has reiterated the three classic requirements and has held as
under:
10. This Court has considered the duty of a Charity Commissioner under
Section 36 of the Act of 1950 in the recent decision in Cyrus Rustom Pa-
tel v. Charity Commr. This Court has observed that three classic require-
ments have to be considered by the Charity Commissioner i.e. the interest,
beneft and protection of the Trust. The Charity Commissioner has to be
objectively satisfed that there is necessity to dispose of the property in the
interest of public Trust. The power of the Charity Commissioner extends
to inviting ofers from members of public and can also direct the trustees to
sell or transfer the trust property to a person whose bid or quotation is the
best.
22) In Shri Ambadevi Sanstha the Apex Court set aside the sale
permission after noting somewhat similar fact situation as involved in the
present Petition, both on counts of delay in submission of application and
receipt of earnest money. The Court held:
18. The ofers were invited for land in 1994 and the applications were
filed in the year 1997-11998 for grant of permission to sell the properties
of the Trust. The prices of 1994, thus, could not have been considered
to be the value as on the date the permission was applied for. Apart
from that, no serious eforts were made by the Joint Charity Commissioner
to ascertain the value of the properties in the years 1990, 1994 or 1998.
After the advertisement inviting ofer was issued in respect to lands, it is
apparent that the ofer of Mr M.K. Lakde was for Rs 9000 per acre for a
part of land, nonetheless it was much more than the value accepted by the
Joint Charity Commissioner. Merely on the ground that the Trust had
accepted the earnest money from Mr Jaikishore Karwa of Rs 21,000, no
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equity was created in his favour to purchase the property. It was not open to
the Joint Charity Commissioner to permit the sale on the ground of receipt
of earnest money in illegal manner. Before permission to sell no such
agreement could have been entered into. The same indicated predisposition
of the Trust to sell it in illegal manner. The valuation report from Talathi
was based on ipse dixit indicated the value of the land as Rs 8000 per acre.
The ofer could not have been accepted in view of the available higher
ofers. The Joint Charity Commissioner has failed to protect the interest of
the Trust.
19. Mere statement by the Trust that earnest money was received from
prospective purchasers of house in the year 1990, thus, it should be
sold to them, could not be said to be a legally permissible approach. It
was not legally permissible to receive earnest money or to create any
interest without grant of prior permission to sale. Thus, no equitable
consideration could have arisen in favour of the purchasers by the payment
of earnest money of Rs 1,60,000 in the year 1990.
(emphasis supplied)
23) In Sailesh Developers, the Full Bench of this Court has held in
paras-60, 61 and 62 as under:
60. Thus narrow Interpretation sought to be given to the power of
Charity Commissioner under clauses (a) and (b) of sub-section (1) of
section 36 cannot be accepted. Thus the view taken in the case of
A.R. Khan Construwell and Co. (supra) is the correct view. The case of
Arunodaya Prefab is not correctly decided.
61. The second question referred to the Full Bench for decision is
regarding locus standi of a person who appears before the Charity
Commissioner and ofers his bid to challenge the order passed by the
Charity Commissioner. The trustees and persons having an Interest
in the Trust can always challenge the order. We have already held
that the proceeding under section 36 of the said Act before the
learned Charity Commissioner is a judicial proceeding. The Apex
Court has held that a trust property is on par with a public property
so far as Its sale or transfer is concerned. It is, therefore, very
difcult to say that such a person who appears before the Charity
Commissioner and ofers his bid has no locus standi to challenge the
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fnal order passed by the Charity Commissioner. Such a person will
certainly have locus standi to fle the petition under Articles 226 and
227 of The Constitution of India for challenging the fnal order
passed under section 36 of the said Act. However, the scope of
challenge will be naturally limited. Such a person will be in a position
of a bidder challenging the auction or tender process of sale of a
public property. The challenge by such a person to the order will be
limited to the decision making process of the Charity Commissioner.
In the case of A.R. Construwell the Division Bench has rightly held
that the decision in the case of Arunodaya Prebab the concept of locus
standi has been expanded.
62. Hence, we answer the questions referred to our decision as
under:
(i) The power vesting in the Charity Commissioner under
section 36 of the Bombay and Public Trusts Act, 1950 is not
confined merely to grant or refusal of sanction to a particular
sale transaction in respect of which sanction is sought under
section 36 of the said Act. The power of the Charity
Commissioner extends to inviting ofers from the members of the
public and directing the trustees to sell or transfer the trust
property to a person whose bid or quotation is the best having
regard to the interest, benefit or protection of the trust. Hence,
we declare that the decision of the Division Bench of this Court in
the case of Jigna Construction Co. Mumbai v. State of Maharashtra
does not lay down correct law.
(ii) The party who comes forward and submits his ofer directly
before the Charity Commissioner and complies with other
requirements as may be laid down by the Charity Commissioner in a
pending application under section 36 of the said Act of 1950 has a
locus standi to challenge the fnal order passed in a proceeding under
section 36. However, the scope of the challenge will be limited as
indicated in paragraph 29 above.
(iii) We direct the Ofce to place the Writ Petitions before the
appropriate Benches for deciding the same in accordance with law.
(emphasis supplied)
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24) Mr. Deshmukh has relied upon Suburban Education Society
(supra), in which the issue before the Division Bench of this Court was about
permissibility of undertaking the exercise of inviting ofers before fling
application under Section 36 of the Trust Act. The Division Bench has held
in paras- 18 and 21 as under:
18. In our view the said observation made by the Charity
Commissioner is absolutely unfounded. Inasmuch as the scope of
authority which is exercised by the Charity Commissioner under
section 36(1)(a) is very limited. The Charity Commissioner in the
frst place is required to consider whether the Trust has a genuine
need for the purpose of selling its immovable property and secondly
whether the said property is being sold in the interest of the Trust
and its benefciaries. The Charity Commissioner is not supposed to
substitute his own ideas and views vis-à-vis the functioning of the
Trust. It is very strange that the Charity Commissioner has observed
as under: -
"No doubt the trust intending to provide better conductive
infrastructure to the children of junior and senior K.G. level to
provide better fundamental education to them, which requires
heavy funds. However, that problem can be solved by securing
loans from other Institutions like banks and other fnancial
institutions etc. It is not necessary to put the plots for sale."
21. We are satisfed after perusing the applications which are made
by the petitioner that the need of the petitioner in raising the funds is
genuine which is also not disputed by the Charity Commissioner. We
are also of the view that the decision of the Trust for selling these two
plots for the various reasons mentioned in the said applications have
not been considered by the Charity Commissioner and we feel that
the two Resolutions which have been passed by the Trust in 1998 and
2001 cannot be said to be improper. The learned Counsel appearing
on behalf of the Charity Commissioner submitted that because the
petitioner had accepted the advance money and had entered into an
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agreement for sale without obtaining previous permission of the
Charity Commissioner, the transaction itself was liable to be rejected.
We do not fnd any merit in the said submission. From the perusal of
Section 36(1)(a), it is very clear that the Trust is supposed to make an
application to the Charity Commissioner after complying with
various formalities. It is not expected that the Trust would approach
the Charity Commissioner without frst issuing the advertisement
and receiving ofers from the various purchasers. If the submission of
the learned Counsel appearing on behalf of the Charity
Commissioner is accepted, it would mean that the entire procedure of
sale would commence after the application is made to the Charity
Commissioner. In our view, the provisions of Section 36(1)(a) are
very clear and such an interpretation cannot be given to the said
provisions. It is obvious that the monies, if any, which are received in
advance by the Trust are subject to fnal permission which is granted
by the Charity Commissioner and in the event such permission is
rejected, the Trust will be under a legal obligation to return the said
amount which it has received from the purchaser.
25) Thus, the law is well settled that while exercising the power of
sanctioning alienation of Trust property, the Charity Commissioner is
empowered to take all steps to ensure the interest of the trust, which includes
even power to re-auction the property.
26) In my view, the Joint Charity Commissioner ought to have
applied his mind atleast to the contents of the application before passing an
order for inviting fresh bids in a mechanical manner. If he was satisfed that
inviting of fresh bids was warranted in the present case, he ought to have
recorded reasons for doing so. In absence of recording of reasons for inviting
fresh bids, the cryptic order passed by the Joint Charity Commissioner does
not inspire confdence. At the same time, though the order dated 24 July
2023 passed by the Joint Charity Commissioner does not show application of
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mind, it clearly appears that there was considerable delay on the part of
Respondent No.2-Trust in seeking sanction under Section 36(1)(a) for
alienation of the Trust property. This aspect is considered by the Apex
Court in Shri Ambadevi Sanstha (supra). As observed above, the decision to
alienate the property was taken in January 2019 and the entire bidding
process was complete by 1 April 2019. However, the application for seeking
sanction under Section 36(1)(a) was fled belatedly on 28 June 2023 i.e. after
four long years. The Trust pleaded following reasons for delay in fling of
application in para-18:
18) Reason for the Delay in Submission of Application :
Reason for procedural delay mainly caused in fnaliiing MOU was
pandemic of Corona in the year 2020 and 2021. Furthermore, soon
after MOU was fnaliied, one Mr. Pradeep Keer fled suit No. 1712 of
2021 in City Civil Court along with ad-interim application seeking
stay on re-development process. This is subsequently dismissed on
16.01.20223 without granting any further stay in this matter.
Therefore, delay has occurred in submitting this application.
27) In view of delay of 4 years in submitting application by the
Trust, the Joint Charity Commissioner cannot be faulted entirely in inviting
fresh ofers. The error committed by him however is not to apply his mind to
the facts of the case and ordering invitation of fresh ofers in a mechanical
manner. Be that as it may. The exercise carried out by the Joint Charity
Commissioner in inviting fresh bids has not fructifed into any better
competitive bidding for purchase of the trust property. Defendant No.5 is
the only entity who submitted its ofer for purchase of the trust property at
Rs.10 crores. Interestingly, Respondent No.5 had ofered only Rs.3.50 crores
for purchase of the trust property in April 2019. After invitation of fresh
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ofers, it has increased its ofer to Rs.10 cores possibly after noticing
Petitioner's ofer of Rs.9,07,00,000/-. The diference between the ofer of
Respondent No.5 is Rs. 93,00,000/-. Upon a query raised by the Court, Mr.
Deshmukh, after taking instructions from his client, fairly submits that
Petitioner is willing to match the ofer of Respondent No.5 of Rs.10 crores.
This would ensure that Respondent No.2-Trust receives maximum possible
price for sale of its property in the tender process implemented by it and by
the Joint Charity Commissioner.
28) I am not impressed with the submission of Mr. Bhargude that
Petitioner and Respondent No.5 should be permitted to increase their ofers
and that this Court should conduct exercise of bidding amongst the two.
There have already been two bidding process in which the maximum possible
price secured for the trust property is Rs.10 crores, which appears to be way
higher than the valuation of Government Approved Valuer, who indicated
the market value at Rs.6,31,79,000/- after noticing that the trust building is
fully occupied by the tenants.
29) There is yet another reason why the Trust needs to be permitted
to sell its property to Petitioner. The Trust's building is heavily tenanted. All
the 120 rooms are occupied by tenants/staf of police. Petitioner has already
struck a deal with the residents for their rehabilitation. Thus, interests of
tenants/residents is also equally important, though that may not be the
consideration under Section 36 of the Trust Act. Bringing another developer
on board at this juncture, who may or may not ofer same deal to the
residents, is not advisable considering the fact that Petitioner is willing to
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match the bid of Respondent No. 5. Perusal of the ofer given by Petitioner to
the tenants and residents would indicate that permanent alternate
accommodations admeasuring 405 sq.ft, corpus of Rs. 2,00,000/- as well as
transit rent of Rs. 30,000/- per month for 4-5 years is the fnancial burden on
the developer who undertakes redevelopment of the Trust building.
Considering all these aspects, I do not think it necessary to undertake any
further competitive bidding between Petitioner and Respondent No.5.
30) It must also be borne in mind that mere possibility of securing
higher price due to passage of some time, may not in every case, be a reason
for conducting fresh bidding process, especially when the time gap is not too
long. In the present case, this Court has noticed the fact that Petitioner
secured its claim to the trust building in the tender process implemented in
April 2019, thereafter, paid insignifcant sum of Rs.51,00,000/- on 21
November 2021 and the application seeking permission was fled only in June
2021. It is on account of this time gap, this Court enquired with Petitioner
whether it was ready to match the price ofered by Respondent No.5. Since
Petitioner has matched the price of Respondent No. 5 and therefore the
object behind inviting fresh ofers has been met with.
31) In my view, therefore sanction can be granted to the proposal of
Respondent No.2 Trust to sell its property to Petitioner at ofer of Rs.10
cores.
32) The Writ Petition accordingly succeeds. The Joint Charity
Commissioner shall proceed to issue sanction under the provisions of Section
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36(1)(a) for alienation of the trust property by Respondent No.2-Trust to
Petitioner at price of Rs.10 crores by imposing such terms and conditions as
are thought appropriate. The earnest money deposited by Respondent No. 5
shall be refunded forthwith. With the above directions, the Writ Petition is
partly allowed. Rule is made partly absolute. No costs.
[SANDEEP V. MARNE, J.]
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